15 thoughts on “Sachem Capital Baby Bond Pricing”

  1. Does anyone else think it’s strange in this environment to see a company offer a new issue of preferreds at a HIGHER rate?

    1. Saratoga Investment Group did the same thing. New issue with a higher rate than what was already outstanding back in June

    2. Sachem is a hard money lender and this is a fairly small offering, so its not that unusual imo. Also, Sachem can easily lend this money out at a higher rate then they’re paying for it, and for investors its a chance to get an extra years worth of call protection and a higher coupon.

      1. I know what a hard money lender is… but I can’t help picturing sitting in their office asking for a loan that a bank or other traditional lending institution won’t give me.

        The guy is wearing a pin stripe suit, the office smells of smoke and intense sweat as deals are being worked out. The deals are “potentially” the lifeblood and a last ditch effort to get a loan to keep a business afloat for the next year. You gotta keep that family business alive, and as you look across the table, the guy has a chiseled chin and a broken and bruised nose. He looks as if you skip a payment he will cut off your finger for every month you miss….

        1. “I know what a hard money lender is… ”

          Not based on that obsolete cliched stereotype you just provided you don’t.

          1. Thanks for setting me straight Citadel on term definition. I sometimes don’t know what I am talking about, and I just ramble. But, I do work for one of the largest banks in the US, and when we turn a business away for a loan… i can only imagine what they do to get money to keep their businesses running. Hard money lenders is what they turn to. If you are borrowing short at 8%, they are then turning around and lending short at … And my CEO makes in 1 month what this company makes in an entire year.

            Every investor should set aside some money for spicy investments, and this one fits the bill. This investment might be better than playing slots, but for my personal investments, I’ll turn elsewhere.

            1. Mr. Conservative, we come from different sides but reach same conclusion. You know the bank loan business, and I know I would never dream of trying to borrow money at those usury rates thinking I could be profitable from it.
              But I agree a little spice is good for me also. But my little spice bucket is full already, so its a pass for me too.

            2. The rates big banks charge for consumer lending are usurious, as anyone with a credit card well knows. The notion that these banks are somehow “better” than hard money lenders like Sachem who provide a valuable service to a growing niche industry is risible. In truth…Sachem clients will likely be buying REO assets for pennies on the dollar from those “better” big banks before the end of next year.

              1. Im all for them having that business model. If they cant do better than 17% and Sachem loans it, good for both of them. Im just not seeing their bond offering yield as a generous charitable rate designed solely to line the pockets of the buyers of the security. There is a reason it is over 7% while other issues are coming out at almost half the yield with extreme duration risk. Even Egan Jones wouldnt give it an A rating. Certainly would consider it as a higher risk buy no question. I just keep a tight percentage lid there for me, and there is no more money to allocate there.
                But conflating consumer unsecured credit with hard asset loans seems a bit odd. But…I am getting 1.9%- 3% one year offers to use my credit cards almost daily.

                1. Just for fun I looked up the credit card APRs from the biggest bank in the country. Purchase APR 15.99%…Cash Advance APR 24.99%…Balance Transfer APR 15.99%. Forget the low “introductory” rates which are marketing gimmicks designed to get you hooked, these are the standard rates big banks charge their best customers. These rates are “variable” also, and compounded “daily” to squeeze every nickel. Most people don’t even question these usurious rates either, they just pay their “minimum balance” each month and never question how long it will take to pay the debt.

                  -btw I know scores of people (including myself) who made a mint buying distressed property from “big banks” in the last financial crisis, and “hard money” played an essential role. Maybe this time will be different, but given how greedy and stupid “big banks” are, I kind of doubt it.

                  1. CW, I certainly agree, with you on the CC, as what you mentioned is 100% correct (and has always been throughout time) and the rates you mentioned are standard fare. I was only mentioning they were throwing out low short term yields in unsecured manner for people like me with pristine credit quality. As an enticement yes, but it can be manipulated to ones benefit like I have done for decades.
                    I digress as my point I didnt explain in full was unsecured credit card consumer debt is high risk. And the rates they get for that is comparable to “hard asset loans”. So these must be in same ball park of risk despite their asset backed loan status. Personally I would rather invest on the front end on a seasoned individual distressed investor such as yourself, over the backend of the entity funding many which may include many that dont know what they are doing or have little to lose on the gamble.

              2. The big banks have billions of assets. Sachem has 4 mil cash on the books, so I would think they could buy a distressed property on the beautiful Lake Minnetonka here in MN. I agree that this is a niche company as it appears they strive for 13% loans, which is probably not the norm for other lending institutions. It is also classified as a REIT.

          1. haha. nice jda.
            The rest of the story…

            The borrower gathers up his belongings, papers, bank statements, his business plan, and other notes. He was proud of the business plan as it was printed on high-end 28 lb premium card stock. He was proud of the plan, and gathered the plan into his sweaty hands as he put them and arranged them in his briefcase. The plan contained the continued investment in his American Dream and how it would change his community – he owned a local taco shop and bar. How it would employ 5 more people, extend the bar area, and of course continue to pay employees through covid.

            The loan process was successful. He negotiated at 19% interest rate for 2 years. It is a time for celebration. He will go home, celebrate, and call the employees that they have jobs for 2 more years. They all get together and meet at the taco shop. But first, he had to go home and change his clothes. The smell of smoke, sweat, and stench is about to overtake him and he needs to change his sweaty clothes. The dark pit-stained shirt looks as if he worked all day in the local mines. Then he is off to the local liquor store to pickup a couple of $6 bottles of mixed red wine to celebrate with everyone…

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